The UAE is looking for ways to continue financing legitimate trade with Iran after the organisation that handles worldwide banking transfers disconnected most Iranian banks from its systems over the weekend, according to Minister of Economy Sultan Bin Saeed Al Mansouri.
Al Mansouri said he met his Iranian counterpart Sayyed Shamsuddine Husaini last week in Dubai and discussed trade relations and how to help UAE and Iranian businesses caught up in the recent ban on banking transfers implemented by the Belgium-based Society for Worldwide Interbank Financial Telecommunication, or SWIFT.
"We discussed the issue of financial transfers, to safeguard the best interests of traders from both countries... most importantly we discussed the issue of the SWIFT system which has been shut down," Al Mansouri said in a telephone interview.
Dubai is one of Iran's largest trading partners, with two-way trade last year worth Dh50 billion.
SWIFT facilitates the flow of most electronic financial transactions. Virtually all major banks and finance firms use it to send financial data and messages. With effect from Saturday, SWIFT complied with a European Union ban on dealings with sanctioned Iranian institutions, including the country's central bank.
Al Mansouri said the UAE will comply with international sanctions imposed on Iran for its nuclear programme, but is seeking ways to ensure legitimate trade can continue, including supplies of medicine and food which are exempted from sanctions.
"Such a disruption in the financial transfers has had a large impact on the [UAE] commercial sector and there has been injustice inflicted on some of the traders in this regard," Al Mansouri said.
He said discussions are continuing with the UAE Central Bank and with the country's commercial banks and exchange houses to find solutions on how to continue financing trade with Iran.
Once barred from using SWIFT, Iran is expected to seek out other payment systems to continue conducting trade, such as Iban, or International Bank Account Number. But financial experts said such systems aren't used nearly as widely as SWIFT and, therefore, the cost of transactions will increase significantly for Tehran.
The UAE is located just 56km from Iran across the Strait of Hormuz, and is home to hundreds of thousands of Iranian nationals and persons of Iranian origin.
Dubai has traditionally facilitated trade and imports for Iran, much as Hong Kong historically did for China.